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Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

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Presentation on theme: "Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09."— Presentation transcript:

1 Corporate Presentation December 2009

2 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY Operational performance FY07-09 About China Gas Demand growth outlook5 27Natural gas pricing outlook6

3 About China Gas

4 4 Overview Principal Businesses 1.Natural gas services operator: Principally engaged in the investment, operation and management of city gas pipeline infrastructure, distribution of natural gas to residential and industrial users, construction and operation of natural gas refilling stations; started this business in 2002 when China decided to build the West-East Pipeline – Operates in 113 city concessions with 30-year monopolistic operating right each – Has a pipeline network of more than 27,000 km serving around 4.1 million household users and nearly 30,000 industrial and commercial users 2.LPG Supplier: The only vertically-integrated LPG operator in PRC; entered into the LPG industry in September 2008 – Owns 11 LPG receiving terminals, 275,000 m 3 of LPG storage capacity, upstream to downstream distribution network in PRC Have strategic cooperation with PetroChina in both the natural gas and LPG businesses in China

5 5 Natural gas Business model Storage tanks (spherical or cylinder) Natural gas fields Assets owned by the Group: Main pipelines Branch pipelines Pressure regulating boxes Switches Processing stations * Customers pipelines which are not owned by the Group are within the customers premises and are not highlighted in this diagram. City gate Industrial users* Residential households* Commercial users*Car refueling station National or provincial pipelines

6 6 Natural gas Revenue model and pricing 2 main sources of revenue –Gas connection: one-off payment mainly from residential users, less so from industrial and commercial users –Sale of piped gas: recurring income at tariffs approved by the local governments Exploration Wellhead price Transportation Transmission tariffs Distribution Distribution cost & margin FINAL TARIFF COMPONENTS NDRC approvalLocal price bureau approval Natural gas business operates on a cost-plus pricing model

7 7 Natural gas Project development process Bid & award Construction & development months Operation 30 years About 15 projects under review Investment criteria include: 1. Project IRR > 15% 2. Industrial demand 3. Natural gas accessibility Revenues: Gas connection fees Projects under development 2007: 20 projects 2008: 18 projects 2009: 47 projects Revenues: Sales of piped gas Projects in operation 2007: 37 sites 2008: 50 sites 2009: 66 sites China Gas has a strong track record of developing city gas projects on time and on budget

8 8 Natural gas Current project locations Beijing Shanghai Heilongjiang Jilin Liaoning Inner Mongolia Xinjiang Tibet Qinghai Gansu Ningxia Shaanxi Shanxi Henan Shandong Hebei Jiangsu Anhui Zhejiang Fujian Jiangxi Hunan Guangdong Taiwan Guangxi Hainan Yunnan Guizhou Sichuan Chongqing Tianjin Shaanxi Baoji, Qishan Xian, Yulin Hebei Cangzhou, Cangzhou Economic Development Zone, Nanpi, Qinghe, Leting, Xinle, Gaocheng, Pingshan, Feng Nan, Neiqiu, Wangdu, Nanbao, Bohai New Area, Hebei Pipeline Hubei Yichang, Xiaogan, Hanchuan, Yingcheng, Yunmeng, Suizhou, Tianmen, Guangshui, Dangyang, Xiaogan Pipeline, Dangyang Pipeline, Huanggang-Daye pipeline Hunan Yiyang, Yuanjiang Guangdong Maoming, Conghua, Meizhou, Yunfu, Shanwei Guangxi Yuling, Qinzhou, Liuzhou, Fongchenggang, Laibin, Baise, Nanning Dongmeng Development Zone Chongqing Dianjiang E&P, Yubei District, Dingwang purification, Chongqing Pipeline Inner Mongolia Hohhot, Wushenqi, Wushenqi Pipeline, Changmeng Pipeline, Baotou, 5 counties Ningxia Zhongwei Fujian 28 city gas concessions Jiangsu Pizhou, Yangzhong, Nanjing (Jiang Bei), Xuzhou (Jiawang), Xuzhou (Xinyi), Yangzhou Anhui Wuhu, Huainan, Shouxian, Suzhou, Wuhuxian, Nanling, Huoshan, Fengtai Wuwei Zhejiang Hangzhou (Xiaoshan), Shaoxing, Taizhou, Jinhua Liaoning Dalian, Fushun, Jinzhou, Sujiatun(Shenyang), Jinzhou D. Zone, Liaoyang, Gaizhou, zhuanghe, linghai, Wafangdian, Pulandian Shandong Dezhou, Qingdao Tianjin Tianjin Pipeline Heilongjiang Harbin, Jiamusi, Shuangcheng Hubei

9 9 Liquefied petroleum gas China Gas is the largest and only vertically integrated LPG supplier in the PRC covering retail and wholesale Our LPG business covers: –Upstream: Direct supply from PetroChinas 28 refineries (total capacity 6m tons); also import from the Middle East; –Midstream: 11 receiving terminals, 275,000 m3 LPG storage facilities, fleets of vessels and trucks, and distribution logistics in Guangdong, Guangxi, Fujian, Zhejiang and Jiangsu; –Downstream: Direct retail of bottled LPG to households. Our vertically integrated LPG business provides a sustainable gross margin of 17+%

10 10 Strategic partnerships China Gas has joint venture with each of GAIL, Oman Oil and SK E&S to leverage on their technical knowhow and experience in their respective expertise Each of GAIL, Oman Oil, SK E&S and ADB has senior person on the board of China Gas, providing valuable insights and advice from the international and diversified perspectives Strategic shareholders have partnered and helped China Gas growth through the years CHINA GAS Management SINOPEC Strait Finance GAIL Oman Oil ADB Oman Fund Public SK E&S 8.64%6.30%10.20%6.30%7.13%4.50% 4.85%4.98%47.10%

11 Operational performance FY07-09

12 12 Gas volume growth 2, ,

13 13 Natural gas Customer breakdown million m 3

14 14 Natural gas Customer growth No. of end users Portfolio totalNew connections FY2007FY2008FY2009FY2008FY2009 Residential1,349,7822,253,0443,745,370280,230418,695 Industrial Commercial10,45119,32528,5111,8522,616 CNG Stations

15 Natural gas Average tariffs (RMB/m 3 ) (ex-tax) Type of end userFY2007FY2008FY2009 Residential Industrial Commercial CNG stations

16 16 Other operational data FY2007Growth %FY2008Growth %FY2009 Total Daily NG Consumption (m 3 )1,618, %3,931, %6,855,126 Total Pipelines (km)9, %16, %25,866 Urban Population Covered32,008, %42,801, %50,550,000 Penetration Rate16.5%20.6%24.7% Average Connection Fees2,0929.7%2,2956.2%2,437

17 Financial performance FY07-09

18 18 Financial summary Income statement FY2007FY2008FY2009 HK$ (000) (restated) Natural GasLPGTotal Turnover 1,236,4692,552,0754,051,6502,272,1736,323,823 Gas Sales 750,1011,691,1592,678,3772,272,1734,950,550 Connection Fees 387,243615,2821,127,403 Other Sales 99,125245,634245,870 Gross Profit 419,764746,1191,300,204129,1451,429,349 EBITDA 406,474817,3251,215,699 EBIT 307,045620,006869,100 Profit after Tax 236,249187,571*133,959** Profit Attble to shareholders 200,789141,059*103,679** Basic EPS (HK Cents) *3.11** * after a HK$167m non-cash impairment due to convertible bonds issued in June 2005 ** after a HK$366m non-cash impairment due to interest rate swap contracts

19 19 Financial summary Balance sheet & debt position HK$ (000)FY2007FY2008FY2009 Total assets7,308,84711,306,127 18,086,766 including Construction in progress922,1241,399,851 1,950,637 Total equity2,692,8053,686,006 4,017,271 Cash1,512,3471,674,641 2,896,457 Short term bank debt686,781157,061 3,103,855* Long term bank debt2,242,4525,624,4547,194,067 * Of which HK$2,669m comes from the LPG subsidiary, about 84% of it was day Letter of Credit financing for its LPG import business

20 20 Income statement Turnover breakdown FY2007FY2008FY2009

21 21 Balance sheet Debt maturity profile Short-term debt of the Group primarily consists of trade financing from banks for the LPG trading business Bank borrowings consist primarily of bank loans Management is committed to prudent capital management, and currently most of Groups debt is long term Debt Maturity Profile

22 FY2010/11 guidance

23 23 FY2010~2011 guidance Management will focus on organic growth of existing city gas and pipeline projects. New investments will be on opportunistic basis. FY2010FY2011 Gas volume (m 3 )3.3 – 3.5 bn 4.5 – 5.0 bn New residential connections 500,000 – 520, ,000 – 650,000 CNG stationsto reach 90 – – 130 LPG salesto reach 1.3m tons2.0 – 2.2 m tons

24 Demand growth outlook

25 25 Demand growth outlook Major volume and revenue growth drivers FY10-12: –Increase in penetration rate: From 25% to 60% by 2014 – enhanced connection fee income –More industrial connections: Previously constrained by limited supply of gas; waiting lists in cities will gradually be shortened –CNG stations rollout: To build at least 120 new CNG stations in 30 cities by 2012 Growth made possible by: –Commissioning of new gas fields and national pipelines –Import of piped gas from Central Asia –Completion of more LNG terminals

26 Natural gas pricing outlook

27 27 Natural gas pricing outlook Wellhead and retail prices are bound to hike because of new gas sources and imports Expect an average of 8~10% increase per annum in the next 5 years Natural gas pricing reform is expected to be implemented end of 2009 or early 2010 Pricing reform helps: –Transparency and clarity of price adjustment mechanism –Maintain price competitiveness of natural gas against alternative fuels Cost pass-through mechanism will continue to work to pass on price adjustments to users

28 28 Disclaimer Statements in this presentation and handout that are not strictly historical are forward-looking statements. Forward-looking statements involve risks and uncertainties, including, but not limited to, continued acceptance of the Companys product and services in the marketplace, competitive factors, new products and technology changes, the Companys dependence upon third party suppliers and other risks detailed from time to time in the presentation, handout and other related documents. China Gas is not responsible for the accuracy and completeness of the contents of such presentations and/or other documents. The materials and information in the presentations and other documents are for informational purposes only, and are not an offer or solicitation for the purchase or sale of any securities or financial instruments or to provide any investment service or investment advice.


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